Did you know that if you’ve suffered from a flood, break-in, or other unexpected loss at your home, you may be able to deduct those losses on your tax return? These types of misfortunes are called “casualty losses,” and in many cases, you can offset the loss with substantial tax deductions.
What Is a Casualty Loss?
A casualty loss is the unexpected loss or damage of property due to a specific, identifiable event. These types of events include natural disasters, thefts, fires, and more. If the loss takes place in a federally declared disaster area, they are often called “disaster losses.” Any casualty or disaster loss that is not covered by insurance can be deducted on your tax return.
- Casualty losses should be deducted on the return for the year in which they occurred.
- Disaster losses may be deducted on the return for the year in which they occurred OR the year before the loss.
Losses can be calculated by evaluating each item’s cost and fair market value (FMV); the lesser amount is the deductible loss.
Have questions about casualty and disaster losses and your tax return? Call Taxation Solutions, Inc. We understand that this may be a hard time for you, and we are standing by to put our 40+ years of experience to work for you. Contact us now to get started.